Correlation Between Okta and Eaton Vance
Can any of the company-specific risk be diversified away by investing in both Okta and Eaton Vance at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Okta and Eaton Vance into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Okta Inc and Eaton Vance Limited, you can compare the effects of market volatilities on Okta and Eaton Vance and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Okta with a short position of Eaton Vance. Check out your portfolio center. Please also check ongoing floating volatility patterns of Okta and Eaton Vance.
Diversification Opportunities for Okta and Eaton Vance
0.03 | Correlation Coefficient |
Significant diversification
The 3 months correlation between Okta and Eaton is 0.03. Overlapping area represents the amount of risk that can be diversified away by holding Okta Inc and Eaton Vance Limited in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Eaton Vance Limited and Okta is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Okta Inc are associated (or correlated) with Eaton Vance. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Eaton Vance Limited has no effect on the direction of Okta i.e., Okta and Eaton Vance go up and down completely randomly.
Pair Corralation between Okta and Eaton Vance
Given the investment horizon of 90 days Okta Inc is expected to generate 6.25 times more return on investment than Eaton Vance. However, Okta is 6.25 times more volatile than Eaton Vance Limited. It trades about 0.15 of its potential returns per unit of risk. Eaton Vance Limited is currently generating about 0.0 per unit of risk. If you would invest 7,240 in Okta Inc on August 31, 2024 and sell it today you would earn a total of 402.00 from holding Okta Inc or generate 5.55% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Insignificant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Okta Inc vs. Eaton Vance Limited
Performance |
| Timeline |
| Okta Inc |
| Eaton Vance Limited |
Okta and Eaton Vance Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Okta and Eaton Vance
The main advantage of trading using opposite Okta and Eaton Vance positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Okta position performs unexpectedly, Eaton Vance can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Eaton Vance will offset losses from the drop in Eaton Vance's long position.The idea behind Okta Inc and Eaton Vance Limited pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.| Eaton Vance vs. Blackrock Health Sciences | Eaton Vance vs. Prudential Health Sciences | Eaton Vance vs. Alger Health Sciences | Eaton Vance vs. Deutsche Health And |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Comparator module to compare the composition, asset allocations and performance of any two portfolios in your account.
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